Learning Guide. [Unit/Cluster Name, Delivery Plan Mode] Unlock your Potential It starts here. BSBMGT517 Manage Operational Plan: Develop Operational

Transcription

1 Unlock your Potential It starts here BSBMGT517 Manage Operational Plan: Develop Operational [Unit/Cluster Name, Delivery Plan Mode] Learning Guide Northern Sydney Institute

2 Table of Contents Table of Contents... 2 Overview... 3 Topic 1 Develop operational plan... 6 References Bsbmgt517_Learning_Guide_Topic 1_V1 Page 2 of 18 Revision date: 06/08/2016

3 Overview Learning Guide What is planning? A plan is a projected course of action aimed at achieving objectives. The plan aims to coordinate action so that objectives can be reached in the most effective and efficient way. Plans are projected courses of action aimed at achieving future goals. They provide clear objectives and map the activities need to reach them effectively. Plans may be long term, like the strategic plans that guide the entire organisation or they may be shorter term operational plans. Think of a strategic plan as the wheels that steer the entire organisation in a chosen direction and operational plans as the rudders that guide it and fine-tune its direction. (Cole p.548) Good planning is an important management skill which helps managers identify and concentrate on important issues. Planning provides the groundwork for the future and gives you a way to track performance and assess achievements. It helps eliminate duplication of effort and meet schedules more easily. It helps managers to direct employees efforts and skills effectively, coordinate employees and their jobs, and minimise disruptions and expenses. Plans give the team s efforts purpose and direction. They help the work group reach the goals by telling them what needs to be done and in what order. When a manager plans well, everyone knows why something is being done, what is to be done, who is to do it, where it is to be done, when it is to be done and how it is to be done. When your team members know this, they feel that things are under control, which helps them perform better. They can refer to the plan and take steps to ensure that the needed tools, people, information and materials are available to meet requirements so they won t be caught short. Types of planning There are many plans a manager may use. The purpose of each type of plan is shown in the table below. Types of plans Type of plan Strategic Business Purpose To establish the future direction of the organisation and show the big picture usually contains the organisation s vision, mission, goals and key measures of success To chart the organisation s major activities for the next three to five years provides the overall focus and direction Operational To provide guidance about how to get short-term activities done leads to the achievement of the overall goals in the business plan Contingency To provide guidance in response to any unexpected events, risks or variations Bsbmgt517_Learning_Guide_Topic 1_V1 Page 3 of 18 Revision date: 06/08/2016

4 Operational planning Managers prepare and manage operational plans. In this role they use their management and leadership skills. By being aware of their organisation s strategic plans and business plans, they are able to ensure the objectives and activities in their operational plans reflect their department and organisation s goals and objectives. The private sector focus is on achieving maximum performance levels to achieve maximum returns on costs. The public sector (more often) is a non-profit organisation. Therefore, the emphasis is on lower costs and providing quality services and products to the community. The public sector usually provides a necessary service, so the operational plan focuses on performance for quality and covering costs rather than performance for profit. An operational plan may focus on: human resources operational structure purchasing financial information service delivery policies and procedures technology upgrades systems and reporting structures In some organisations, activities are managed through operational plans. In others they are managed as projects. Operational planning brings together and optimises the use of resources necessary to implement the work group or team activities successfully. These resources include: people facilities tools equipment information techniques money An operational plan shows how an area of operations will work to achieve one or more organisational or departmental objectives. Operational plans are shorter term than the strategic and business plans they support, generally looking ahead one week to one year. As the plan becomes more short term, their precision increases. Operational plans allow the frontline manager and team leaders to: track performance and measure achievement eliminate wasted resources reach their goals identify and focus efforts on important issues reduce uncertainty and help them prepare for any needed changes Bsbmgt517_Learning_Guide_Topic 1_V1 Page 4 of 18 Revision date: 06/08/2016

5 Learning Guide use people s efforts effectively, minimising disruptions allocate resources to meet requirements meet schedules more easily and make operations smoother improve safety in the workplace Typical operational plans may include: work schedules resource requirements performance targets other plans, such as: o holiday rosters o departmental training plans o health and safety improvement plans project plans for once-only activities or special occurrences Stages of operational planning Operational plans have three main stages: 1. Development (scoping and planning) stage 2. Implementation stage 3. Monitoring and review stage Bsbmgt517_Learning_Guide_Topic 1_V1 Page 5 of 18 Revision date: 06/08/2016

6 Topic 1 Develop operational plan The purpose of the operational Plan should align with the organisation's vision, mission, goals and objectives as detailed in the strategic and business plans. As part of the development stage, the manager needs to: Consult with relevant stakeholders at each stage of the development process Develop consultation processes as an integral part of the operational planning process Establish realistic operational goals and objectives. Research, analyse and document resource requirements Set key performance indicators to measure operational performance Develop and implement contingency plans Develop proposals for resource requirements Present proposals and obtain approval for operational plan from relevant parties Consulting with relevant stakeholders An effective manager develops the operational plan in consultation with those who will put the plan into operation, or may be impacted by or have a stake in the implementation of the operational plan. Consultation with relevant stakeholders over major decisions is critical to the success of your operational plan. You are not expected to know everything as a manager. A good manager knows when it is time to seek advice and assistance from others in the organisation particularly when they have their own areas of expertise. Involving others will also raise their interest and commitment to ensuring the success of the plan. A lack of consultation fails to take advantage of the available knowledge and expertise; makes people feel left out and decrease the chances of successful implementation. Relevant stakeholders may include: Senior managers Managers at the same level Supervisors Workgroup or team members Work health and safety committee/officer People with specialist responsibilities (e.g. Marketing, HR, Finance, Purchasing) Union or employee representatives By consulting, the frontline manager: Gathers ideas and information from those who are closest to the work practices and hence know most about what happens Provides opportunities for people to express their views Gains the buy-in or acceptance of the operational plan Encourages the stakeholders to accept any new strategies Demonstrates respect for the views of the workgroup Bsbmgt517_Learning_Guide_Topic 1_V1 Page 6 of 18 Revision date: 06/08/2016

7 Consultation may be about: Objectives for the year ahead Changes in procedures Work health and safety Marketing and customer related data Budget and related financial data Quality assurance Work roles and responsibilities Performance targets Individual and team performance successes Outcomes of continuous improvement Developing consultation processes Consultation processes provide opportunities for people to contribute to the development and implementation of the operational plan. They refer to: /intranet communications, newsletters, meetings, interviews, brainstorming sessions or other processes and devices which ensure that team members and other stakeholders have the opportunity to express their views and gain their buy-in or acceptance of the proposed plan. Mechanisms used to receive/provide feedback from/to the work team and other stakeholders in relation to outcomes of consultation. Your role as an operational manager is to make sure that your team and other stakeholders are aware of where you are heading. This will encourage them to offer their knowledge and skills. Team members have good understanding of where bottlenecks and other issues are. Their suggestions add value to the plan and they feel empowered when you act upon them. Establishing realistic operational goals and objectives Operational goals and objectives clarify the purpose of the operational plan; what you are trying to achieve and the major tasks within the plan. They allow managers to go ahead with planning, organising, implementing, monitoring and controlling activities. The goal provides the overall or longer term aim, providing focus and direction for day-to-day activities and a reference for decision making, e.g. to provide a safe, healthy and satisfying work environment. (Cole, p.549) Objectives are shorter term and more specific. One method that is often used is to break down goals into smaller goals, and break these down further and further until you have operational objectives that can be easily implemented. Objectives must be SMART: Specific, Measurable, Achievable, Relevant and Time-bound. If you can t measure your objective, you will have no idea whether or not you have actually managed to achieve it, e.g. all employees to pass Work Health and Safety (WHS) test at a mark of 95% or above by September Bsbmgt517_Learning_Guide_Topic 1_V1 Page 7 of 18 Revision date: 06/08/2016

8 Defining tasks Once you have defined the operational goals and objectives, you can begin to focus on the actual work required to implement the plan. Defining tasks involves identifying all the tasks to be carried out in the implementation stage of the operational plan. This usually results in a detailed work breakdown structure from which your team has a complete understanding of the work that is required to achieve the goals and objectives of the operational plan. A task is an element of work and must be clearly defined. A guideline for defining tasks is outlined below: Identify tasks as precisely as possible. Each task should be short compared to the overall duration of the work plan Tasks must be significant enough to include in the work plan. Insignificant tasks only clutter your work breakdown structure. The level of detail in your list of tasks should be appropriate for the amount of planning and control you want. Remember to include reports, reviews and coordination activities in your work breakdown structure, as well as tasks for anticipated rework or modifications. Researching, analysing and documenting resource requirements Once the goals, objectives and work breakdown structure of your plan are in place, the manager needs to think through the physical, financial and human resources aspects of the plan. Obtaining details of resource requirements enables managers to match the appropriate resources to the tasks and activities needed to implement the operational plan. The process involves researching, analysing and documenting the resources you need. Reputable and relevant information that will help you collect details of resource requirements will include: Workplace policies and procedures Planning and organisational documents Quality assurance reports WHS reports Marketing data Financial data Client/customer data Staff and client surveys Archived, filed and historical background data Individual and team performance data Continuous improvement outcomes Bsbmgt517_Learning_Guide_Topic 1_V1 Page 8 of 18 Revision date: 06/08/2016

9 Resources required to implement your plan include: Time Time Human and Other Capacity Resources Physical resources Financial resources In order to estimate how long the plan will take to implement, it is important to estimate the duration of each task or activity. For example a Gantt chart provides a visual representation of a work plan which helps sequencing the tasks or events by laying them out in the order in which they need to be completed. On the left of the chart is a list of the tasks and along the top is a suitable time scale. Each task is represented by a bar; the position and length of the bar reflects the start date, duration and end date of the task. A typical format of Gantt chart is shown below. The chart allows you to see at a glance: What the various tasks are When each task begins and ends How long each task is scheduled to last Source: Gantt.com Where tasks overlap with other activities, and by how much The start and end date of the whole work plan Human and other capacity resources The next step is to identify the human capacity and skills required to implement your plan, and your current and potential sources of these resources. Common human resources issues that you may need to investigate at this stage are: Do you need consultants or other experts to help you implement the plan? Can existing staff implement the plan? Do your staff need additional training or do you need additional staff? If you need more staff, should they be temporary or permanent? Should they be casuals or contractors? Could you obtain staff from another area of the organisation? The human resource capability matrix is a very useful tool in identifying the best people to perform the activities and tasks in your plan. A typical format of the matrix is shown below. Bsbmgt517_Learning_Guide_Topic 1_V1 Page 9 of 18 Revision date: 06/08/2016

10 Objective: [here you state the objective you want to achieve] Team member Capability 1 Capability 2 Capability n To complete the matrix you need to: 1. State the objective of the operational plan in the row labelled Objective 2. List the names or roles of your team members in the left hand Team Member column 3. Label each capability column with one of the skills needed to do the tasks required to deliver the operational plan 4. Record the skills that each team member currently has, deciding on an appropriate rating. For example: + = Minimal proficiency ++ = Some proficiency +++ = Good proficiency ++++ = Excellent proficiency can train others 5. Record the skill level of each team member in the appropriate cell. The human resource capability matrix will identify strengths, weaknesses and skill gaps. This will allow you to recognise where you are strong, where you need to provide training and where you need to find new staff to fill any gaps. Example Human resource capability matrix Objective: Establish organisational policies and procedures in line with the WHS committee s recommendations, by the end of September Team member Capability 1 Decision-making skills Capability 2 Policy and procedure writing skills Capability 3 Knowledge of WHS A B C D E From the table above we can see that: Capability 4 Project management skills Person A is highly proficient in writing policies and procedures, but has a poor knowledge of WHS. Person E, on the other hand, is highly proficient in WHS, but has limited skills in writing policies and procedures. Both person A and person E are good at decision-making and have strong project management skills, so between the two they might be able to complete the task required. Other capacities required to implement your plan may include internal systems, management structures, specialist resource managers, and a supportive legal framework. Bsbmgt517_Learning_Guide_Topic 1_V1 Page 10 of 18 Revision date: 06/08/2016

11 Physical resources Physical resources required may include: Goods and services to be purchased and ordered Consumables Stock requirements and requisitions Plant and equipment Space Facilities Technology The level of detail will vary depending on the size and complexity of your plan. Financial resources Financial resources are the lifeblood that set the plan in motion. You need to estimate the funding required to implementing your plan and, identify your current and potential sources of these funds, and the funding gaps. One of the most common tools used for estimating funding is the budget. A budget shows the target of an operational plan in financial terms. A sample budget of a Training and Development Department within a large company is shown below Sample budget report Training & Development DESCRIPTION Labour Jan Employees 32,083 Employee Development/Relation In-house Training Provided 47,655 External Training /Conferences 850 Course Materials 5400 Operating Expenses Consultants Other Couriers 142 Dues & Subscriptions 0 Newspapers & Publications 0 Photocopying 2215 Postage & Airfreight 500 Printing & Stationery 291 Rental/Hire Equipment 3916 Telephone 754 Travel/Accommodation Local 500 TOTAL 126,076 Bsbmgt517_Learning_Guide_Topic 1_V1 Page 11 of 18 Revision date: 06/08/2016

12 Setting key performance indicators to measure organisational performance Key Performance Indicators help define and measure progress toward organisational goals and objectives. Once an organisation has defined its goals, it needs a way to measure progress toward those goals. Key Performance Indicators are those measurements. Key performance indicators reflect the organisational goals An organisation that has as one of its goals to provide maximum return on investment in our industry will have key performance indicators that measure return on investment. Earning per share will be among them. On the other hand, a public school is not concerned with return on investment, so its Key Performance Indicators will be different. KPIs like "Graduation Rate" and "Success in finding employment after graduation". Key performance indicators must be key to organisational Success Many things are measurable. That does not make them key to the organisation's success. In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organisation reaching its goals. For example, if an organisation has one of its goals "to be the most profitable company in our industry" will have Key Performance Indicators that measure profit. "Net Profit Margin" will be among them. However, "Percent of Profit Contributed to Community Causes" probably will not be one of its Key Performance Indicators. It is also important to keep the number of KPIs small just to keep everyone's attention focused on achieving the same KPIs. That is not to say that a company will have only three or four KPIs in total. Rather there will be three or four KPIs for the company and all the units within it will have three, four, or five KPIs that support the overall company goals and can be "rolled up" into them. If a company s KPI is "Increased Customer Satisfaction", that KPI will be focused differently in different departments. The Manufacturing Department may have a KPI of "Number of Units Rejected by Quality Inspection", while the Sales Department has a KPI of "Minutes a customer is on hold before a Sales Rep answers". Success by the Sales and Manufacturing Departments in meeting their respective departmental KPIs will help the company meet its overall KPI. Key performance indicators must be quantifiable If a KPI is going to be of any value, there must be a way to accurately define and measure it. "Generate More Sales from Repeat Customers" is useless as a KPI without some way to distinguish between sales generated from new customers and repeat customers. It is also important to define the KPI and stay with the same definition. You need to address considerations like whether to measure by number of sales transactions or by dollar value of sales. You also need to set targets for the KPI such as percentage increase of sales per year. For example, a company goal to be the employer of choice might include a KPI of "Turnover Rate". After the Key Performance Indicator has been defined as "the number of voluntary resignations and terminations for performance reasons divided by the total number of employees at the beginning of the period" and a way to measure it has been set up by collecting the information in an HRIS (Human Resources Information System), the target has to be established. "Reduce turnover by five percent per year" is a clear target that everyone will understand and be able to take specific action to accomplish. Bsbmgt517_Learning_Guide_Topic 1_V1 Page 12 of 18 Revision date: 06/08/2016

13 Good key performance indicators vs. Bad Bad: Learning Guide Title of KPI: Defined: Measured: Target: Increase Sales Change in Sales volume from month to month Total of Sales by Region for all regions Increase each month What's missing? Does this measure increases in sales volume by dollars or units? If by dollars, does it measure list price or sales price? Are returns considered? How much, by percentage or dollars or units, do we want to increase sales volumes each month? (Note: Some of these questions may be answered by standard company procedures.) Good: Title of KPI: Defined: Measured: Target: Employee Turnover The total of the number of employees who resign for whatever reason, plus the number of employees terminated for performance reasons, and that total divided by the number of employees at the beginning of the year. The HRIS contains records of each employee. Monthly or when requested, the HRIS group will query the database and provide Department Heads with Turnover Reports. Reduce Employee Turnover by 5% per year. What do you do with key performance indicators? Once you have good KPIs defined, ones that reflect your organisation's goals, ones that you can measure, what do you do with them? You use them as a performance management tool. KPIs give everyone in the organisation a clear picture of what is important, of what they need to make happen. You use that to manage performance. You make sure that everything the people in your organisation do is focused on meeting or exceeding those key performance indicators. Developing and implementing contingency plans Contingency planning continually confronts the likelihood of unexpected events or risks that may interrupt the normal operations of the organisation. There is a wide range of contingencies that you may have to face. The cause of the interruption does not matter, but being capable of gaining control of the interruption does. The consequences that management has to face depend on the severity and length of the interruption. In a worst case scenario, the very survival of the organisation is on the line. The answer to this problem is to be prepared in advance. This involves foreseeing the risks or unexpected events that may arise and developing solutions to them before they occur. The objectives of contingency planning are to: Ensure continuity and survival of the business Protect business assets Manage and control risks Bsbmgt517_Learning_Guide_Topic 1_V1 Page 13 of 18 Revision date: 06/08/2016

14 Contingency planning challenges You should be aware of a few common obstacles as you begin your contingency planning process: One of the greatest challenges of contingency planning is making sure you don't plan too much. You need a careful balance between over preparation for something that may never happen, and adequate preparation so that you can respond quickly and effectively to a crisis situation when necessary. People are often poorly motivated to develop a strong Plan B because they have too much of an emotional investment in the Plan A they want to deliver. Stress that Plan B should be properly thought-through. There is usually a low probability of a crisis occurring, so people often don t feel a sense of urgency to create a contingency plan, meaning that it gets stuck at the bottom of their To Do Lists. Unfortunately, this may mean that contingency planning ends up as a task that never gets done. In the interests of consistency with accepted Australian practices, it is recommended that you use the Australian/New Zealand Standard Risk Management 4360:2004 to develop and implement contingency plans. For details refer to the Risk management process section in the BSBMGT502B Manage People Performance Learning Guide. Developing proposals for resource requirements No organisation has unlimited resources. There will always be cost restrictions that limit the resources available to an organisation. However cost restriction is not the sole reason why resources may not be available. Physical resources used by an organisation may not be readily available because of limited supplies and or suppliers. There may be limited numbers of skilled people with the required competencies available to work in an organisation. There are many techniques that could be used to develop proposals for resource requirements. One of these techniques is the development of resource plans. A typical resource plan format is shown below. <company/department/business unit/work area name> Resource Plan Objective Here you state the objective that you want to achieve and how it relates to the organisational objectives. Work schedule Here you define exactly how you plan to achieve your objective. That is, the what and when: What tasks that must be performed When timelines in which tasks must be completed Resources required Here you list all the required resources to perform the relevant tasks. These include financial resources, physical resources (such as equipment, facilities, material), and staffing (including competencies, skills and training) Bsbmgt517_Learning_Guide_Topic 1_V1 Page 14 of 18 Revision date: 06/08/2016

15 Contingencies Learning Guide Here you describe the risks or unexpected events you foresee and how you go about resolving them if they arise Benefits Finally you should explain how the achievement of your objective will benefit the organisation. A resource plan is a chart that outlines the objective you want to achieve, how you plan to achieve it and what resources are required. Each objective that you set yourself to achieve should have a resource plan provided. The outcome will form the basis of your proposal for resource requirements. Management will examine it to decide whether or not to approve your request for resources to implement the operational plan. Completing the chart will assist you in identifying: - What and when tasks to be performed, and the completion date - Resources you will need to perform the identified tasks - Who you will need to assist you in achieving the objective - Risks or unexpected events that may occur and how they will be resolved - How the organisation will benefit as a result of achieving the stated objective Conducting cost-benefit analysis Cost-benefit analysis can be used to determine the difference in the financial benefits offered by alternative uses of scarce organisational resources. There are variety of approaches to review the costs and benefits of a plan or activity. One approach to cost-benefit analysis is the use of benefit-cost ratio where benefits are divided by costs to give a ratio of benefit to one. Where resources are sought, the ratio is calculated as follows: Benefit-cost ratio = B / (l + O) Where: B = the benefit that flows from the use of resources I = the initial investment in the plan or organisational activity O = the operating cost of a plan or organisational activity. As a rule, if the benefit-cost ratio is more than one then the use of the organisation's resources is acceptable. Where there may be competing uses for scarce resources then comparisons of the alternative uses of the resources would need to be made. The following are two competing plans. There are only sufficient organisational resources to undertake one of the two proposed plans: Plan A Expected return/benefit from the plan = $150,000. Initial investment in the plan or organisational activity = $80,000. Operating cost of the plan = $20,000. Benefit-cost ratio = 150,000 / (80, ,000) This simplifies to 150,000 / 100,000 = 1.5 Bsbmgt517_Learning_Guide_Topic 1_V1 Page 15 of 18 Revision date: 06/08/2016

16 Plan B Learning Guide Expected return/benefit from the plan= $110,000. Initial investment in the plan or organisational activity = $70,000. Operating cost of the plan = $30,000. Benefit-cost ratio = 110,000 / (70, ,000) This simplifies to 110,000 / 100,000 = 1.1 Both plans have a ratio above one. However, Plan A shows a greater benefit from the use of available resources. It would normally be the preferred use of the resources because it has the higher benefit-cost ratio. Although the financial benefits are good reasons for proposing the use of resources, there are benefits that do not immediately result in a positive financial outcome, but they add value to the name of the organisation. Examples could be the use of resources to support a community activity which may have long-term benefits in terms of community support for the organisation. Presenting proposals and obtaining approval for operational plan from relevant parties Each proposal regardless of its purpose should: Add value to an organisation Comply with organisational purposes Contribute to meeting strategic objectives, and Fit with organisational policies. Proposals for use of resources should emphasise the efficiency and effectiveness of the usage of operating resources. Any proposal should meet any legal requirements in relation to the behaviour of an organisation. Though some proposals for use of resources may be considered informally by an organisation many organisational proposals need to be formalised and presented in writing for consideration. Proposals for additional resources will generally need to be approved by the management. The proposal is essentially a sales document. For a proposal to be successful it should be well organised and be able to persuade the manager who will make the decision to agree to the proposal. Though each proposal may be different in terms of the information you have and what you want to sell, the following is a general guideline that might be used: Title for the request Purpose of the request Introduction and background information - including any issues and problems Reason for the request - seeking funds to acquire resources to perform certain activities Objectives to be achieved and how they Relate to the organisation's objectives Nature of the resources required, including detailed timing and estimated costs Any risks to the organisation in using the resources and proposed solutions Proposed outcome of the request for resources benefits Possible consequences if the request is not granted Options available to acquire resources and methods of acquisition Bsbmgt517_Learning_Guide_Topic 1_V1 Page 16 of 18 Revision date: 06/08/2016

17 Conclusion reiteration of the importance of the request including key points that are likely to influence the manager who is to make the decision Attachment of graphs, tables, etc. as required. Bsbmgt517_Learning_Guide_Topic 1_V1 Page 17 of 18 Revision date: 06/08/2016

18 References Learning Guide Books Dwyer, J, Hopwood, N. 2013, Management Strategies and Skills, McGraw-Hill Education, Australia. Cole, K. 2010, Management: theory and practice, 4 th edition, Pearson Education Australia, Chapters 12, 15, 16. Jones, R. 2010, Managing Human Resource Systems 2 nd Edition, Pearson, Chapter 6. Bacal, R. 2006, How to Manage Performance, McGraw-Hill Education Pty Ltd, Australia. Hale, J. 2004, Performance Based Management What Every Manager Should do to get Results, Pfeiffer, San Francisco, USA. Carlopio, J, Anderwartha, G, & Armstrong, H. 1997, Developing Management Skills in Australia, Longman, South Melbourne. Lees, I. 1996, Managing Performance and Goal Achievement, McGraw-Hill Publications Great Place to Work Institute, 2013, Best Places to Work 2013 Study, BRW Magazine. Hull, D & Read, V. 2003, Simply the Best: Workplaces in Australia, Australian Policy Online apo.org.au. Shields, J, O Donnell, M. 2002, Performance management and the psychological contract in the Australian Public Sector, Journal of Industrial Relations, Vol. 44, No 3, pp Bsbmgt517_Learning_Guide_Topic 1_V1 Page 18 of 18 Revision date: 06/08/2016